It has been past practice to begin with a review of our 1996 forecasts. For example we recently suggested selling many of our long term buys such as Hewlett Packard (HWP) and Seagrams (VO), while others like Boeing are now holds. As we have become web based, we will update our site later this month with this information as we archive these past forecasts.
The first Quarter of 1997 is an astrologer's delight with a MAJOR astronomical event each month:
The first has been most responsible for the speculative bubble of current markets (Neptune keyword: Unrealistic, Jupiter: Optimism). It celestially marks the beginning of this end. Specifically its rulership extends to the extreme valuation of Drug stocks and Entertainment stocks which will decline.
Jupiter/ Uranus (High Tech) will likewise begin to send the sky-high multiples of the technology sector closer to earth. Investors will less often hear such post-IPO frenzies such as when one analyst not long ago projected NETSCAPE would soon be a $1000 stock.
The March Eclipse is the KEY trigger for our date March 11th call.
[For a preview of the next MAJOR market paradigm (Jupiter/Saturn conjunction in 5/28/00) see my book INVESTING BY THE STARS].
Before Alan spoke this past week, many money managers believed a 10,000 DIJA was inevitable by the year 2000. "Bears" saw a 20-25% correction first, and THEN to be followed by the next inevitable rally. I FIND THAT VERY SCARY - WHY? THE US ECONOMY IS NOT GOOD. I would flatly predict another recession, having called the LAST one- beginning/end perfectly and documented by Barron's. However the new "1984" government reporting may not substantiate it, so instead I am forecasting under 1% growth first half of next year.
In 1972 the DIJA first reached 1000; 25 years later it was 6 1/2 times higher. Remember the Real Estate mantra of the 1980's? BUY BUY BUY, Real Estate NEVER loses, it ALWAYS goes up 10-15% a year. It is NOT different this time!!! The BUY AND HOLD STOCK/MUTUAL FUND MANTRA will meet the same fate!
Imagine the effect of NEGATIVE cash inflows (redemptions) in today's overvalued market. Couple that with some poor profits in the next earning reporting period and what have we?
IN 1997, INVESTORS WILL LEARN
1. TO SELL ON RALLIES, INSTEAD OF BUYING ON DIPS. MARKETS CAN GO DOWN -- first quarter will be the worst but rest of year is no celebration.
2. Money managers don't only buy and hold. They also rotate stock holdings merciliously. LAST YEARS WINNERS OFTEN BECOME DOGS IN THE FUTURE AND VICE VERSA. SIMILARLY, MANY OF THE BEST PERFORMING STOCKS AND FUNDS OF 1995/6 (e.g. INDEX FUNDS, HIGH TECH MOMENTUM STOCKS AND THE NEW NIFTY FIFTY) WILL PERFORM POORLY IN 1997.
There are two potential caveats that could delay but NOT postpone the inevitable:
1. Replacing social security with compulsory private savings that could be invested in stocks and bonds.
2. The "1984" revision of US inflation numbers to keep Bond holders happy as the Japanese begin to exit.
So here are my SIX potentially winning investment strategies for 1997:
Naturally the SEC and I advise you to do your own research and/or to check with your licensed financial advisor or broker before enacting any of them . However, hopefully in 1997, the Astrologers Fund will be offering our Jupiter (growth), Saturn (value and income) and Pluto (hedge) funds publicly by which time you may fully profit from all my cosmic wisdom, assuming you are not currently a client.
I am recommending as much as 60% or MORE cash allocation for 1st Qtr 1997- OUR HIGHEST SINCE 1987. Traditional practices like buying quality - the so called new nifty 50 stocks, won't work as they are SOOOO overpriced. I think it better to wait out the 1997decline and buy value whenever it reappears. MAKE UP YOUR WISH LIST OF GREAT STOCKS TO OWN. It could happen! There are MANY good companies out there (unfortunately without good stock values). For example, Lucent Technologies (LU) is a great company with stellar future sales and earnings etc. But buying it at current pricing is just plain crazy INHO. Others like Republic Bank (RNB) don't have as far to fall to reach decent value. Energy Sector stocks will selectively do well with continuing world wide demand whether or not there is a recession. The odds of an energy consumption tax in the US next year, which could slow demand, are no greater than a REAL Martian invasion.
Other potential winning strategy examples:
*** GENUINE VALUE: KLM
*** COMPANY SPLITS: MO
*** MERGER & AQUISITION TARGETS: FRONTIER (FRO), BANK OF NEW YORK (BK)
*** MARKET MISTEAKS: ATT (T) AND NOVELL (NOVL)
*** SPECIAL SITUATIONS: AFEC INDEX (705): C. ANV, C.PKT.A, V.SMR, V.SXG, V.MAD
Some stocks are not overly effected by overall market conditions such as those in the Astrologers Fund Emerging Canada Index (AFEC). Our 1997 Index include junior golds. If they strike, their stock prices explode. I have also included some of George Chelekis's Junior Gold picks at the end of this report. I strongly recommend reading our MAY 1996 INVESTING BY THE STARS report first. Also, my new update EMERGING CANADA report is helpful if you are not experienced in this area. OTHERWISE STAY CLEAR OF THIS. ASE/VSE stocks act like hybrid future options, and may rocket in days from $1 to $7 or crash from $7 to $1.
*** THE NEXT MICROSOFT: INTERNATIONAL HI-TECH INDUSTRIES (IHITF)
WHY I AM BUILDING A WINE CELLAR IN 1997? Last year I asked clients and friends who bought International Hi-Tech Industries (IHITF or V.IHI) to give my wife a bottle of champagne when IHI stock reaches $30 CD. Well, Jupiter/Uranus hits this Winter and their first factory goes on line in early Summer, so I am getting ready. If you haven't checked out this stock, do so call 1-800-838-8090 or surf to www.ihiintl.com. I PREDICT that I shall be swimming in bubbly within 18 months!!!
DO YOU KNOW WHEN TO SELL STOCKS? When you would no longer buy the same stock at the price it is being currently being offered. Also not selling a stock because you will pay too much tax is NOT advisable IF you believe the stock will seriously decline in the near future. However you can use a strategy of writing covering calls on stocks such Boeing (BA) or American Express (AXP) which we consider holds.
Other recommended defensive actions include buying into the Gold sector. Yes it hasn't done so well recently. It is no longer a crisis metal since the Gulf war and the government says there is no inflation. Those Beltway computers don't eat, pay taxes, go to college etc. Sure you can substitute cheaper goods and services and say there is no inflation, but there is quality of life inflation. TRY LIVING AS WELL AS YOU DID 10 years ago - what would that cost? The proposed downward revision of COLA (cost of living adjustment) will of course be the easy way out of dealing with the REAL economic problems of time (more populist oratory to be posted in another report later :) )
I consider Oil and GOLD commodities that will go up long term because of strong demand, as well as a patriotic way (for US citizens) TO SHORT THE $US DOLLAR. Yes I still like Gold. See my earlier gold reports for my favorite companies.
Diversify internationally. All the world's markets will NOT decline as much as ours. Also, you may benefit from a carefully chosen currency hedge. A few of my favorite countries for long term investment are: Japan (1997 primarily), Norway, Australia, Canada, and Italy (especially mid 1998- 1999).
As I wrote in my book INVESTING BY THE STARS 1997 is the YEAR to be in Japan. The Japanese are keeping their money home for good reason. I agree with them. This past week currency traders started to agree with me :). My investment recommendation here include: The Japan Fund, Honda, Mazda and Sony.
A frequently used strategy in the future markets, hedging involves buying a strong instrument/stock and selling a similar sectored but weak one.
Remember my 1996 Mantras: BUY IHI/ Sell NETSCAPE and BUY AQA.A/ SELL IOMG. Let's see how they fared to date:
1/1 SPX 615 12/7 739.60 NSCP 139 116 (split adjusted 57 7/8) IHI 1.45 1.85
Second MANTRA UPDATE: BUY AQX.A/SELL IOMG 5/23 AQX.A .48 12/7 .35 IOMG 55 23 1/2
I continue to STRONGLY recommend the IHI hedge throughout 1997, and to a lesser extent the AQUATEX hedge for the first half of 1997. [NOTE: one could well trade these hedges. For example, subsequently NETSCAPE was down more than 50% to 34 1/2 and IHI more than doubled to as high as 4.15. ]
Here's our entire 1997 list to date!
Before you go for the gusto, KNOW THE DANGERS OF SHORT SELLING (SHORT SQUEEZES) BEFORE you do it for real. You can of course read my INVESTING BY THE STARS section on this.
Astrologers, while agreeing that the "crash" will take place in first qtr, disagree as to which month. January, February or March? If you want to play it safe, BUY OEX PUTS FOR MARCH or APRIL (the same with your stock puts). Whether the market crashes in January, February or March, you will make money. Actually more like a balloon being deflated than a crash. Circuit breakers have taken care of that. Otherwise, this past Friday would have been down 500 points or more, on opening.
DESERT ISLAND PLAYS OR LOOMING DISASTERS: Hong Kong (HANG SENG) and Mexico (BOLSA) again. TMX is once again my Mexican short of choice, especially with deregulation of the Mexican telephone industry in 1997.
MY SINGLE FAVORITE STOCK SHORT-DISNEY (DIS) - tears in the magic kingdom! OTHER GIANTS ABOUT TO FALL MORE THAN AVERAGE include: CITIBANK (CCI), GENERAL ELECTRIC (GE) , AND MERCK (MRK).
DON'T overlook brokerage stocks from Merrill Lynch (MER) on down - obviously they will fair poorly in a prolonged market decline as investors flee the markets . Also it is time to review previous short graveyards like Rainforest Café (RAIN ).
MICROSOFT- When you try to rule the world, you create many enemies as IBM did in the past and Microsoft does today. The stock is WAY overpriced but industry analysts don't seem to notice. Now that the stock has split, it will soon run out of momentum as most splits do and THEN VOILA! Key executives are about to leave (jump ship). While Bill may do well with Office 97, by 1998 the N/C will take away a lot of their multi-terminal licensing fees. As one sharp industry analyst told me : " better not buy MSFT: I would add " better still, sell it or short it!"
We don't generally don't give futures or options advice here, as the receipt of the TIMING advise is critical. However, numerous traders will make or lose fortunes next quarter, as currency traders did in December. One suggestion is to consult a local astrologer and have your horoscope potential checked for this time period to find out your personal likely scenario.
7 DIJA FORECASTS
TECHNOLOGY WATCH: CRITICAL year for the following companies. Stayed tuned for updates:
AMERICA ONLINE (AOL), APPLE (APL), NOVELL (NOVL,) PEAK TECHNOLOGIES (C.PKT.A)
1. Primo Resources (VSE:PRI)/Golden Peaks (VSE:GL). This joint venture is soon to start drilling one of the most promising gold properties I have followed since Arequipa. Since I have been following PRI for so long, it remains my favorite (GL is not a bad company; I just know so very little about this company, other than they are financing the play and operating the exploration -- their geologist comes very highly recommended).
2. Leigh Resources (VSE:LRC). Exploration in both the Solomon Islands and Ghana, during 1997. Either could provide LRC with a producing gold mine.. A technical report on Ghana should be due out in late December. This company is widely held by institutions and has some of Canada's heavyweight analysts already following their story.
3. South Duval Gold (VSE:SDG). Exploration in Brazil. SDG holds more ground than any other junior in Brazil and is about sixth in line, behind the various majors exploring in Brazil (Barrrick, RTZ, etc.) Early samples were astounding. More groundwork is being done now. ALL of SDG's exploration is being done as if the company plans to market itself to a major, as did Arequipa. Sometime in early 1997, we'll find out just how good their drilling compares with the early exploration work. On SDG's ground, anomalies are measured in kilometers or tens of kilometers. This is truly elephant country.
4. Asquith (Cdn:ASQH). If there were to be any company that has not disappointed me this year, it would be Asquith. A slow methodical climb up the charts. Early samples were mind-boggling. If drilling pulls anything out of the ground, that we've seen from some of the grab samples, then it will be a case of "move over Bre-X" because the whole mining world will be talking about ASQH.
5. First Choice (VSE:FSD). We won't know just how big the orebody FSD has at Knob Hill on Vancouver Island until later next Spring. FSD's initial results were a good sniff and the market didn't like them. However, few took into consideration how significant the arsenic values were. One rarely finds such a high concentration of arsenic without also finding a gold deposit. My bet is that FSD has a gold deposit on that property.
6. Miranda (VSE:MAD). Their initial drill results in Nevada were disappointing. The company quickly found another valuable property. It is completely surrounded by Penoles, the world's largest silver producer and Mexico's largest mining company. MAD is the donut hole in the middle, as I said completely surrounded by the major. Exploration is set to begin in early 1997. That is the nature of the exploration business. You keep trying and trying and trying and eventually, if you've got the right elements and the right recipe, you succeed. Best, GC P.S. I would also have included Anvil (Alberta:ANV) on this list, but their current play is for copper.
THREE HOT JANUARY EFFECT STOCK PLAYS?
Enzo Biochem (ENZ), Peak Technologies (C.PKT.A), International Hi-Tech Industries (IHI.V or IHITF)
I have promised to provide special reports over the coming months. 1997 may be my last year of doing this. Since May 2, 1988 I have a established a precise forecasting record inferior to none- primarily due to my knowledge of financial astrology. It is my intention to have other top financial astrologers and money managers contribute more on my web site while I concentrate on 1) managing my mutual funds and clients portfolios and 2) PUBLICLY serving as corporate financial astrologer to a number of public and private companies next year. . . .
So Cheers and Aura Best,
PS. Can you afford NOT to have a financial astrologer in your future?
Fall Market 9/20
Summer Alert Part II 7/16
Summer Alert Part I 7/16
(c) 1996 The Astrologers Fund. No part of this report may be reproduced or distributed in any form or by any means, except for brief passages quoted for review without the prior written permission of the publisher.
* The information above is provided by the source indicated and presented by the Astrologers Fund Inc. Neither the Astrologers Fund nor the source guarantee that the information supplied is accurate, complete or timely, or make any warranties with regard to the results obtained from its use. The Astrologers Fund does not guarantee the suitability or potential value of any particular investment or information source.
ALWAYS CHECK WITH YOUR LICENSED FINANCIAL PLANNER OR BROKER BEFORE BUYING OR SELLING ON THE RECOMMENDATIONS OF THE ASTROLOGERS FUND.
DISCLAIMER: PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE FORECASTING ACCURACY OR PROFITABLE TRADING RESULTS. The Astrologers Fund Accepts No Liability Whatsoever For Any Loss Arising >From Any Use Of Its Report Or It's Contents. The Astrologers Fund Or Its Clients Usually Holds Positions In The Stocks and/or Market Instruments Mentioned And May Buy Or Sell At Any Time Without Notice. This Information Is In No Way A Representation To Buy Or Sell Securities, Bonds, Options Or Futures.
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